Flash Report for the Fiscal Year Ended December 31, 2016 [Japan GAAP] (on a consolidated basis) February 13, 2017 Company Name: OPT Holding, Inc. Stock Exchange Listing: Tokyo Stock Code: 2389 URL http://www.opt.ne.jp/english/holding/ Representative: Noboru Hachimine, Founder, President and CEO Inquiries: Yoshitada Ishibashi,Director Phone: +81-3-5745-3611 Scheduled date of the ordinary general meeting of shareholders: March 24, 2017 Scheduled date of commencement of dividend payment: March 27, 2017 Supplemental materials prepared for financial results: Yes (Amounts of less than one million yen are rounded down and percentages are rounded to the first decimal place) 1. Consolidated Results for Fiscal 2016, the Fiscal Year Ended December 31, 2016 (January 1, 2016 December 31, 2016) (1) Consolidated Business Results (% represents year-on-year change) Revenue Operating income Ordinary income Profit attributable to owners of parent Millions of yen % Millions of yen % Millions of yen % Millions of yen % FY2016 69,815 9.0 1,919 18.4 2,004 68.2 745 179.0 FY2015 64,052 (4.4) 1,620 (63.8) 1,191 (70.7) 267 (75.5) Note: Comprehensive income (loss): FY2016: 797 million yen ( %) FY2015: (199) million yen ( %) Basic net income per share Diluted net income per share Return on equity (ROE) Ordinary income to total assets ratio Operating income to revenue ratio Yen Yen % % % FY2016 28.81 28.64 4.5 4.8 2.7 FY2015 10.34 1.6 3.1 2.5 (Reference) Equity in earnings (losses) of affiliates: FY2016: (169) million yen FY2015: (251) million yen (Notes) Diluted net income per share for the fiscal year ended December 31, 2015 is not provided, since there were no shares with dilutive effects. (2) Consolidated Financial Position assets Net assets Net assets ratio Net assets per share Millions of yen Millions of yen % Yen December 31, 2016 46,325 19,720 36.1 643.89 December 31, 2015 37,421 17,609 43.2 625.82 (Reference) Capital: December 31, 2016: 16,708 million yen December 31, 2015: 16,171 million yen (3) Consolidated Cash Flows Cash flows from operating activities Cash flows from investing activities Cash flows from financing activities Cash and cash equivalents, end of the year Millions of yen Millions of yen % Yen FY2016 1,134 (88) 6,860 18,234 FY2015 (3,507) 1,990 (137) 10,136 2. Dividends 1Q-end (Mar. 31) 2Q-end (Jun. 30) Annual dividend per share 3Q-end (Sep. 30) 4Q-end (Dec. 31) dividends (annual) Dividend payout ratio (consolidated) Dividends to net assets ratio (consolidated) Yen Yen Yen Yen Yen Millions of yen % % FY2015 0.00 13.00 13.00 335 125.7 2.0 FY2016 0.00 16.00 16.00 415 55.7 2.1 FY2017 (forecasts) 0.00 Forecast for the FY2017-end dividend is yet to be determined. 3. Consolidated Earnings Forecasts for the Fiscal Year Ending December 31, 2017 (January 1, 2017 December 31, 2017) (% represents year-on-year change) Profit attributable to Revenue Operating income Ordinary income Net income per share owners of parent Millions of yen % Millions of yen % Millions of yen % Millions of yen % Yen Interim Full fiscal year 80,000 14.6 2,400 25.1 1,750 (12.7) 1,000 34.1 38.54 1
Notes: (1) Changes in major subsidiaries during the fiscal year (changes in specified subsidiaries resulting from changes in the scope of consolidation): None Inclusion: None Exclusion: None (2) Changes in accounting policies, changes in accounting estimates, and retrospective restatements (a) Changes in accounting policies arising from the revision of accounting standards, etc.: Yes (b) Changes in accounting policies other than those noted in above (a): None (c) Changes in accounting estimates: None (d) Retrospective restatements: None (3) Number of shares outstanding (common stock) (a) Number of shares outstanding as of the end of the period (including treasury stock) December 31, 2016: 30,089,600 shares December 31, 2015: 29,980,000 shares (b) Number of shares of treasury stock as of the end of the period December 31, 2016: 4,140,000 shares December 31, 2015: 4,140,000 shares (c) Average number of shares during the period FY2016: 25,875,992 shares FY2015: 25,840,000 shares (Reference) Outline of Non-Consolidated Business Results 1. Non-Consolidated Results for Fiscal 2016, the Fiscal Year Ended December 31, 2016 (January 1, 2016 December 31, 2016) (1) Non-Consolidated Business Results (% represents year-on-year change) Revenue Operating income Ordinary income Net income Millions of yen % Millions of yen % Millions of yen % Millions of yen % FY2016 882 (93.1) (266) (111) 256 82.6 FY2015 12,815 (72.3) 339 (91.3) 413 (89.7) 140 (90.0) Basic net income per share Diluted net income per share FY2016 9.92 9.92 FY2015 5.44 (Notes) Diluted net income per share for the fiscal year ended December 31, 2015 is not provided, since there were no shares with dilutive effects. (2) Non-Consolidated Financial Position assets Net assets Net assets ratio Net assets per share Millions of yen Millions of yen % Yen December 31, 2016 28,159 15,016 53.3 578.49 December 31, 2015 22,524 15,033 66.7 581.56 (Reference) Capital: December 31, 2016: 15,011 million yen December 31, 2015: 15,027 million yen 2. Non-Consolidated Earnings Forecasts for the Fiscal Year Ending December 31, 2017 (January 1, 2017 - December 31, 2017) (% represents year-on-year change) Revenue Ordinary income Net income Net income per share Yen Millions of yen % Millions of yen % Millions of yen % Yen Interim Full fiscal year * Regarding the status of audit procedure implementation This flash report is outside the scope of audit procedures as prescribed under the Financial Instruments and Exchange Act of Japan. Audit procedures for financial statements as prescribed under the Act have not been completed at the time of disclosure. * Explanations about the proper use of earnings forecasts and other specific matters Forward-looking statements including earnings forecasts and other specific matters in this document are based on information currently available to management and certain assumptions considered by management to be reasonable. A variety of factors could cause actual results and events to differ significantly from those projected. Yen 2
3. Consolidated Financial Statements (1) Consolidated Balance Sheets As of December 31, 2015 As of December 31, 2016 Assets Current assets Cash and deposits 10,670,933 16,771,468 Notes and accounts receivable - trade 9,910,191 11,440,621 Short-term investment securities 1,999,373 Operational investment securities 4,242,530 5,410,534 Inventories 50,709 48,875 Deferred tax assets 283,768 385,435 Other 2,080,958 1,149,455 Allowance for doubtful accounts (228,683) (254,938) current assets 27,010,408 36,950,824 Noncurrent assets Property, plant and equipment Buildings and structures 400,741 396,594 Accumulated depreciation (201,758) (224,910) Buildings and structures, net 198,982 171,684 Lease assets 370,238 371,561 Accumulated depreciation (175,839) (229,227) Lease assets, net 194,399 142,334 Other 738,524 832,137 Accumulated depreciation (444,457) (525,879) Other, net 294,066 306,258 property, plant and equipment 687,447 620,276 Intangible assets Goodwill 1,837,378 1,317,629 Other 1,302,432 1,749,013 intangible assets 3,139,810 3,066,642 Investments and other assets Investment securities 5,501,910 4,461,159 Other 1,750,017 1,890,387 Allowance for doubtful accounts (668,182) (664,208) investments and other assets 6,583,746 5,687,337 noncurrent assets 10,411,004 9,374,257 assets 37,421,413 46,325,081 3
As of December 31, 2015 As of December 31, 2016 Liabilities Current liabilities Notes and accounts payable - trade 8,051,088 9,307,034 Short-term loans payable 410,000 230,000 Current portion of long-term loans payable 836,395 2,556,387 Income taxes payable 314,254 920,205 Provision for bonuses 309,137 393,659 Other 3,105,877 2,878,276 current liabilities 13,026,752 16,285,563 Noncurrent liabilities Long-term loans payable 6,336,409 9,880,022 Net defined benefit liability 155,273 173,581 Deferred tax liabilities 20,947 64,386 Asset retirement obligations 123,527 110,119 Other 149,041 90,900 noncurrent liabilities 6,785,198 10,319,009 liabilities 19,811,951 26,604,572 Net assets Shareholders' equity Capital stock 7,645,948 7,684,034 Capital surplus 7,740,278 7,827,715 Retained earnings 3,275,303 3,838,251 Treasury stock (3,148,046) (3,148,046) shareholders' equity 15,513,483 16,201,954 Accumulated other comprehensive income Valuation difference on available-for-sale securities 17,482 4,427 Foreign currency translation adjustment 640,280 502,201 accumulated other comprehensive income 657,762 506,629 Subscription rights to shares 5,824 6,164 Non-controlling interests 1,432,390 3,005,759 net assets 17,609,461 19,720,508 liabilities and net assets 37,421,413 46,325,081 4
(2) Consolidated Statements of Income and Consolidated Statements of Comprehensive Income Consolidated Statements of Income FY2015 (From January 1, 2015 to December 31, 2015) FY2016 (From January 1, 2016 to December 31, 2016) Revenue 64,052,229 69,815,591 Cost of sales 50,704,241 55,410,131 Gross profit 13,347,987 14,405,460 Selling, general and administrative expenses Salaries and allowances 5,784,558 5,863,509 Bonuses 248,257 324,967 Provision for bonuses 243,691 322,510 Legal welfare expenses 736,356 743,220 Depreciation 283,387 294,567 Provision of allowance for doubtful accounts 28,088 38,554 Amortization of goodwill 433,786 331,541 Other 3,969,091 4,567,499 selling, general and administrative expenses 11,727,216 12,486,370 Operating income 1,620,770 1,919,089 Non-operating income Interest income 13,761 7,099 Dividends income 4,547 95,125 Commission fees 2,547 Foreign exchange gains 107,623 Gain on investments in partnership 75,063 Other 64,949 59,187 non-operating income 85,806 344,099 Non-operating expenses Interest expenses 26,988 30,403 Commission fee 28,000 Loss on investments in partnership 168,993 Equity in losses of affiliates 251,013 169,861 Provision of allowance for doubtful accounts 11,400 Other 67,731 18,731 non-operating expenses 514,726 258,396 Ordinary income 1,191,850 2,004,793 Extraordinary income Gain on sales of non-current assets 83,895 3,083 Gain on sales of investment securities 1,157,758 532,206 Gain on reversal of subscription rights to shares 1,012 719 Other 23,798 2,078 extraordinary income 1,266,464 538,087 5
FY2015 (From January 1, 2015 to December 31, 2015) FY2016 (From January 1, 2016 to December 31, 2016) Extraordinary loss Loss on retirement of noncurrent assets 35,348 126,660 Impairment loss 307,101 129,522 Loss on valuation of investment securities 813,264 390,719 Loss on sales of investment securities 446 8,187 Other 44,017 5,902 extraordinary loss 1,200,178 660,991 Income before income taxes 1,258,136 1,881,889 Income taxes-current 827,234 1,124,419 Income taxes-deferred 81,235 (193,722) income taxes 908,470 930,696 Net income 349,666 951,192 Net income attributable to non-controlling interests 82,385 205,580 Net income attributable to owners of parent 267,280 745,611 6
Consolidated Statements of Comprehensive Income FY2015 (From January 1, 2015 to December 31, 2015) FY2016 (From January 1, 2016 to December 31, 2016) Net income 349,666 951,192 Other comprehensive income Valuation difference on available-for-sale securities (471,390) (14,492) Foreign currency translation adjustment (56,194) (125,174) Share of other comprehensive income of associates accounted for using equity method (21,284) (13,691) other comprehensive income (loss) (548,869) (153,358) Comprehensive income (199,203) 797,833 (Comprehensive income attributable to) Comprehensive income attributable to owners of the parent (280,798) 594,478 Comprehensive income attributable to non-controlling interests 81,595 203,355 7
(3) Statements of Changes in Net Assets FY2016 (From January 1, 2016 to December 31, 2016) Balance at the beginning of current period Cumulative effect of change in accounting policy Balance at beginning of current year that reflects change in account policy Changes of items during the period Capital stock Capital surplus Shareholders equity Retained earnings Treasury stock shareholders equity 7,645,948 7,740,278 3,275,303 (3,148,046) 15,513,483 (420,795) 242,415 (178,379) 7,645,948 7,319,483 3,517,718 (3,148,046) 15,335,104 Issuance of new shares 38,086 38,086 76,172 Dividends from surplus (335,920) (335,920) Net income attributable to owners of parent Change in the interests in controlled subsidiary 745,611 745,611 470,146 470,146 Change of scope of consolidation (39,664) (39,664) Change of scope of equity method (49,494) (49,494) Net change of items other than shareholders equity change of items during the period 38,086 508,232 320,532 866,850 Balance at the end of current period 7,684,034 7,827,715 3,838,251 (3,148,046) 16,201,954 Balance at the beginning of current period Cumulative effect of change in accounting policy Balance at beginning of current year that reflects change in account policy Changes of items during the period Accumulated other comprehensive income Valuation difference on available-forsale securities Foreign currency translation adjustment accumulated other comprehensive income Subscription rights to shares Noncontrolling interests net assets 17,482 640,280 657,762 5,824 1,432,390 17,609,461 317 317 (178,061) 17,482 640,598 658,080 5,824 1,432,390 17,431,399 Issuance of new shares 76,172 Dividends from surplus (335,920) Net income attributable to owners of parent Change in the interests in controlled subsidiary 745,611 470,146 Change of scope of consolidation (39,664) Change of scope of equity method (49,494) Net change of items other than shareholders equity change of items during the period (13,054) (138,396) (151,450) 340 1,573,368 1,422,258 (13,054) (138,396) (151,450) 340 1,573,368 2,289,109 Balance at the end of current period 4,427 502,201 506,629 6,164 3,005,759 19,720,508 8
(4) Consolidated Statements of Cash Flows FY2015 (From January 1, 2015 to December 31, 2015) FY2016 (From January 1, 2016 to December 31, 2016) Cash flows from operating activities Income before income taxes 1,258,136 1,881,889 Depreciation and amortization 634,791 659,794 Amortization of goodwill 433,786 331,541 Increase (decrease) in allowance for doubtful accounts 14,003 40,089 Increase (decrease) in provision for bonuses (124,917) 80,992 Increase (decrease) in net defined benefit liability 5,585 26,285 Interest and dividends income (18,309) (102,225) Interest expenses 26,988 30,403 Equity in (earnings) losses of affiliates 251,013 169,861 Loss (gain) on investments in partnership 168,993 (75,063) Loss (gain) on valuation of investment securities 813,264 390,719 Loss (gain) on sales of investment securities (1,157,311) (524,019) Impairment loss 307,101 129,522 Loss on retirement of noncurrent assets 35,348 126,660 Loss (gain) on sales of noncurrent assets (83,195) 1,293 Decrease (increase) in notes and accounts receivable trade (282,975) (1,569,880) Decrease (increase) in investment securities for sales (3,265,199) (1,177,239) Increase (decrease) in notes and accounts payable trade (305,985) 1,287,228 Increase (decrease) in accrued consumption taxes (101,151) (346,194) Other 313,021 237,548 Subtotal (1,077,010) 1,599,208 Interest and dividends income received 21,587 101,310 Interest expenses paid (26,867) (29,440) Income taxes paid (2,439,986) (821,549) Income taxes refund 15,160 285,220 Net cash provided by (used in) operating activities (3,507,115) 1,134,747 9
FY2015 (From January 1, 2015 to December 31, 2015) FY2016 (From January 1, 2016 to December 31, 2016) Cash flows from investing activities Payments to time deposits (617,673) (482,831) Proceeds from withdrawal of time deposits 896,872 455,386 Purchase of property, plant and equipment (95,951) (245,996) Proceeds from sales of property, plant and equipment 3,811 Purchase of intangible assets (1,024,303) (989,846) Payments for asset retirement obligations (7,452) (12,898) Proceeds from repayment of securities 1,997,287 Purchase of investment securities (1,216,846) (521,440) Proceeds from sales of investment securities 1,117,379 819,183 Proceeds from repayment of investment securities 482,591 793,215 Proceeds from sales of investments in subsidiaries resulting in change in scope of consolidation 268,502 Payments for lease and guarantee deposits (56,412) (6,486) Proceeds from collection of lease and guarantee deposits 102,676 63,749 Payments of loans receivable (169,861) (116,918) Collection of loans receivable 70,924 155,599 Other 242,290 (2,789) Net cash provided by (used in) investing activities 1,990,024 (88,262) Cash flows from financing activities Net increase (decrease) in short-term loans payable 190,000 (430,000) Proceeds from long-term loans payable 500,000 6,500,000 Repayment of long-term loans payable (1,026,396) (986,395) Proceeds from issuance of common stock 75,624 Proceeds from share issuance to non-controlling shareholders 620,000 1,246,070 Repayments of finance lease obligations (59,635) (62,311) Cash dividends paid (343,508) (337,985) Cash dividends paid to non-controlling interests (11,441) (27,998) Payments from changes in ownership interests in subsidiaries that do not result in change in scope of (39,508) consolidation Proceeds from changes in ownership interests in subsidiaries that do not result in change in scope of 935,154 consolidation Other (7,000) (12,547) Net cash provided (used in) by financing activities (137,981) 6,860,102 Effect of exchange rate change on cash and cash equivalents (41,363) 102,970 Net increase (decrease) in cash and cash equivalents (1,696,436) 8,009,559 Cash and cash equivalents 11,585,343 10,136,632 Increase (decrease) in cash and cash equivalents resulting from change in scope of consolidation 247,725 87,883 Cash and cash equivalents 10,136,632 18,234,074 10
(5) Segment Information FY2016 (From January 1, 2016 to December 31, 2016) 1. Information on Revenue, Income (Loss), Assets and Other Amounts by Reporting Segment Marketing Business Reportable Segment Investment and Value Creation Business Overseas Business Other (Note 1) Adjustments (Note 2) Amounts Recorded in Consolidated Financial Statements (Note 3) Revenue Sales, external 68,288,625 52,839 1,437,741 69,779,206 36,384 69,815,591 69,815,591 Intersegment sales or transfers 6,038 42,899 48,938 412,468 461,406 (461,406) 68,294,663 52,839 1,480,641 69,828,144 448,852 70,276,997 (461,406) 69,815,591 Segment income (loss) 2,667,359 (179,220) (96,470) 2,391,669 118,170 2,509,839 (590,749) 1,919,089 Segment assets 22,936,945 7,281,371 6,089,395 36,307,711 720,971 37,028,683 9,296,398 46,325,081 Other items Depreciation 466,017 158 15,940 482,116 1,043 483,160 176,634 659,794 Amortization of goodwill 327,908 3,633 331,541 331,541 331,541 Increase of property, plant and equipment 1,126,191 762 31,071 1,158,025 312 1,158,337 62,330 1,220,668 and intangible assets Notes: 1. Other is comprised of business segments that are not included in reportable segments and includes the Social & Consumer Business. 2. Adjustments are as follows: (1) The (590,749) thousand yen adjustment to segment income (loss) is attributable to intersegment eliminations and Companywide expenses that are not allocated to each reportable segment. (2) The 9,296,398 thousand yen adjustment to segment assets refers to companywide assets that are not allocated to each reportable segment. The assets are managed mainly by the administrative department. 3. Segment income (loss) refers to operating income (loss) as reported in the consolidated statements of income after adjustment. 11